Sub: Economics Topic: Micro Economics
Question:
computing the profit maximizing price and quantity and profits of a monopolist.
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A monopolist has the following demand function:
QD = 280 – 2P
Its total cost function is
TC = 0.5Q2 + 20Q
This monopoly can only charge a single price in the market.
Solve for the price and quantity that the monopolist would choose to maximize its profit. And
also calculate the resulting profit.
Solution:
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A monopolist has the following demand function:
QD = 280 – 2P
Its total cost function is
TC = 0.5Q2 + 20Q
This monopoly can only charge a single price in the market.
Solve for the price and quantity that the monopolist would choose to maximize its
profit. And also calculate the resulting profit.
Demand function: Q d =280- 2P
Total cost function: TC =0.5Q2 + 20Q
Then, MR and MC would be as follows,
TR =P*Q
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Sub: Economics Topic: Micro Economics
Where, P = 140 -0.5Q
TR = 140 Q – 0.5Q2
MR ==∂TR/∂Q =140 – Q
MC=∂TC/∂Q =20 + Q
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ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like
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www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.